Kenya is moving to rehabilitate its oldest geothermal power plant for increased generation of electricity after securing a Sh9.53 billion loan from Japan.
Treasury Secretary Henry Rotich Friday signed the financing agreement with Japanese officials for the refurbishment of Olkaria I Units 1, 2 and 3 – Africa’s first geothermal plant built in 1981 in Naivasha.
The upgrade will expand the capacity of the ageing steam-powered plant from 45 megawatts to 50.7 megawatts upon completion in November 2021.
“Considering that the project life of the original design is 25 years, the plant is already overworked,” said Mr Rotich, adding that the plant’s maintenance costs had grown even as electricity production dropped.
“The completion of the project will therefore enhance volume and security of electric power supply in Kenya and thereby create a conducive environment for investment.”
Kenya has in recent years switched focus to geothermal energy, which is unaffected by weather unlike hydropower, and is three times cheaper compared to thermal power.
The plant rehabilitation will involve change of steam turbines and installation of new electrical systems.
A turbine, which is the single most expensive equipment in a geothermal plant, converts steam to mechanical energy and passed through generators to produce electricity.
Nairobi will repay the concessional loan at 1 per cent interest rate over a period of 30 years, inclusive of a 10-year grace period.
Since the project is funded by the Japan International Cooperation Agency (JICA), it gives Japanese firms an advantage in the bidding process.
Firms from the Far East nation have emerged as top builders of Kenya’s geothermal power plants and suppliers of heavy duty equipment such as steam turbines, tapping into Nairobi’s shift to green energy.
They include Mitsubishi, Toyota Tsusho and Toshiba.
Toyota Tsusho constructed additional units IV and V at Olkaria I, which is set for upgrade, while Toshiba supplied turbines.
Most recently, power producer KenGen #ticker:KEGN contracted a consortium comprising Mitsubishi to construct a 158-megawatt Olkaria V steam power plant in Naivasha. It will be completed mid-next year.
The firm will also supply turbines.
Toyota Tsusho, along with Korean firm Hyundai, constructed the 280-megawatt geothermal power plants in Olkaria belonging to KenGen, which was added to the national grid in the second half of 2014.
The turbines and generators were supplied by Toshiba.
Kenya is currently ranked the ninth largest producer of geothermal electricity in the world and the leader in Africa with a capacity of 630 megawatts, according to Renewables Global Status report 2017.
Japan is ranked 10th with a geothermal output of 500 megawatts, behind Kenya.